Magnetic Therapeutic Technologies, Inc., et al.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9823150]

Magnetic Therapeutic Technologies, Inc., et al.; Analysis To Aid

Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or

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deceptive acts or practices or unfair methods of competition. The

attached Analysis to Aid Public Comment describes both the allegations

in the draft complaint that accompanies the consent agreement and the

terms of the consent order--embodied in the consent agreement--that

would settle these allegations.

DATES: Comments must be received on or before August 30, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Christa V.A. Vecchi, FTC/H-263, 600

Pennsylvania Avenue, NW, Washington, DC 20580, (202) 326-3166.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of

the Commission's Rules of Practice, 16 CFR 2.34, notice is hereby given

that the above-captioned consent agreement containing a consent order

to cease and desist, having been filed with and accepted, subject to

final approval, by the Commission, has been placed on the public record

for a period of sixty (60) days. The following Analysis to Aid Public

Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for June 24, 1999), on the World Wide Web, at ``http://www.ftc.gov/os/

actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, DC

20580, either in person or by calling (202) 326-3627.

Public comment is invited. Comments should be directed to: FTC/

Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW,

Washington, DC 20580. Two paper copies of each comment should be filed,

and should be accompanied, if possible, by a 3\1/2\ inch diskette

containing an electronic copy of the comment. Such comments or views

will be considered by the Commission and will be available for

inspection and copying at its principal office in accordance with

Section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted, subject to final

approval, an agreement to a proposed Consent Order (``proposed order'')

from Magnetic Therapeutic Technologies, Inc. (``MTT'') and Jim B.

Richardson, the President of the corporation.

The proposed consent order has been placed on the public record for

sixty (60) days for the reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and will decide whether it should withdraw from the agreement

or make final the agreement's proposed order.

This matter concerns Internet, print, and catalogue advertisements

disseminated directly to consumers, and print advertisements provided

to distributors and retail stores, including health food stores and

pharmacies, for dissemination directly to consumers, for proposed

respondents' magnetic therapy products. These products contain magnets

that purportedly treat and alleviate a variety of medical problems,

including cancer, high blood pressure, HIV, diabetic neuropathy, and

Multiple Sclerosis. Proposed respondents' magnetic products include an

assortment of devices, such as Magnetic Knee Supports and Magnetic

Sleep Pads.

The Commission's complaint charges that the proposed respondents

engaged in deceptive advertising in violation of section 5 and 12 of

the FTC Act by making unsubstantiated claims that its magnetic therapy

products: (1) Are effective in treating cancer, including lung and

breast cancers, diabetic ulcers, arthritis, and degenerative joint

conditions; (2) lower high blood pressure; (3) stabilize or increase

the T-cell count of HIV patients; (4) reduce muscle spasms in persons

with Multiple Sclerosis; (5) reduce nerve spasms associated with

diabetic neuropathy; (6) increase bone density, immunity, and

circulation; and (7) are as effective as prescription pain medicine in

alleviating severe pain caused by conditions such as arthritis, carpal

tunnel syndrome, and back pain.

The complaint further alleges that proposed respondents represented

that testimonials from consumers appearing in the advertisements or

promotional materials for proposed respondents' products reflect the

typical or ordinary experience of members of the public who use the

products. The proposed complaint alleges that respondents lack

substantiation for this claim.

This proposed order contains provisions designed to remedy the

violations charged and to prevent proposed respondents from engaging in

similar acts in the future.

Paragraph I of the proposed order prohibits proposed respondents

from representing that their magnetic therapy products (defined as any

product that contains a magnet of any kind purporting to relieve the

symptoms of, treat, mitigate, cure, relieve, heal or alleviate any

disease or health condition): (1) Are effective in treating cancer,

including lung and breast cancers, diabetic, ulcers, arthritis, or

degenerative joint conditions; (2) lower high blood pressure; (3)

stabilize or increase the T-cell count of HIV patients; (4) reduce

muscle spasm in persons with Multiple Sclerosis; (5) reduce nerve

spasms associated with diabetic neuropathy; (6) increase bone density,

immunity, or circulation; or (7) are comparable or superior to

prescription pain medicine, unless, at the time the representation is

made, respondents possess and rely upon competent and reliable

scientific evidence that substantiates the representation.

Paragraph II of the proposed order prohibits proposed respondents

from representing that the experience represented by any user

testimonial or endorsement of any product or program represents the

typical or ordinary experience of members of the public who use the

product or program, unless the representation is true, and competent

and reliable scientific evidence substantiates that claim, or

respondents clearly and prominently disclose either: (1) What the

generally expected results would be for product or program

participants; or (2) the limited applicability of the endorser's

experience to what consumers may generally expect to achieve, that is,

that consumers should not expect to achieve similar results.

Paragraph III of the proposed order prohibits proposed respondents

from making any representation about the health benefits, performance,

or efficacy of any product or program, unless, at the time the

representation is made, respondents posses and rely upon competent and

reliable scientific evidence that substantiates the representation.

Paragraph IV of the proposed order prohibits proposed respondents

from: (1) Disseminating to any distributor any material containing any

claims prohibited by the order; and (2) authorizing any distributor to

make any representations prohibited by the order. In addition,

Paragraph IV requires proposed respondents to (1) send a short notice

to distributors with whom they have done business since January 1,

1994, announcing their settlement with the FTC and the state of Texas,

and

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requiring distributors to submit all proposed promotional and marketing

materials to proposed respondents for approval prior to their

dissemination; (2) send, for a period of three years, the same notice

to future distributors with whom proposed respondents to business; (3)

monitor distributors' promotional activities; (4) terminate, as

appropriate, the right of any distributor to market MTT products or

programs who continues to use promotional materials or make oral

representations that violate the order; (5) provide the FTC all

relevant information about the distributors who continue to engage in

activities that violate the order; and (6) approve all marketing

materials before distributors disseminate them to the public.

Paragraph V contains record keeping requirements for the

notification letters sent to distributors, communications between

respondents and distributors referring or relating to the requirements

of Paragraph IV of the order, and any other materials created pursuant

to Paragraph IV.

Paragraph VI of the proposed order contains record keeping

requirements for materials that substantiate, qualify, or contradict

covered claims and requires the proposed respondents to keep and

maintain all advertisements and promotional materials containing any

representation covered by the proposed order. In addition, Paragraph

VII requires distribution of a copy of the consent decree to current

and future officers and agents. Further, Paragraph VIII provides for

Commission notification upon a change in the corporate respondents.

Paragraph IX requires proposed respondent Jim B. Richardson to notify

the Commission when he discontinues his current business or employment

and of his affiliation with any new business or employment. The

proposed order, in Paragraph X, also requires the filing of a

compliance report.

Finally, Paragraph XI of the proposed order provides for the

termination of the order after twenty years under certain

circumstances.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of the agreement and proposed order, or to modify in any

way their terms.

By direction of the Commission.

Benjamin I. Berman,

Acting Secretary.

[FR Doc. 99-16707 Filed 6-30-99; 8:45 am]

BILLING CODE 6750-01-M